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CX - Reference to 'assessed to duty' in Sec 3 of Additional Duties of Excise (T&TA) Act, 1978 is clear indication that in absence of assessment of duty under CEA, 1944, AED is not leviable: CESTAT

By TIOL News Service

MUMBAI, MAR 01, 2017: APPELLANT is a composite mill and claimed exemption under notification 67/95-CE on woollen yarn, polyester yarn, wool tows and polyester tows that are captively consumed for manufacture of fabric.

SCNs were issued for recovery of Additional Duties of Excise (T& TA) Act,1978 for the period January 2003 to September 2003.

The CCE, Mumbai-III held that the said duty being a surcharge leviable on duty, which itself being 'nil', would exclude the intermediate goods from levy under the Additional Duties of Excise (T& TA) Act, 1978 and accordingly dropped the demand.

Revenue is in appeal against the said order.

The AR submitted that the exemption provided by notification no. 67/95-CE is limited to the basic excise duty or such of the duties as are leviable under the First Schedule to the CETA, 1985, and an independent legislative enactment for levy does not admit to the extension of section 5A of CEA, 1944 to it.

After considering the submissions made by both sides, the Member (T) writing for the Bench observed -

++ We find merit in the argument that reference to 'assessed to duty' is a clear indication that in the absence of an assessment of duty under Central Excise Act, 1944, additional duty is not leviable . This is in consonance with the decision adopted by the Tribunal in re Rivaa Exports Ltd . From a cumulative reading of section 3 of Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 it would not be possible to alienate chargeability under this Act from assessment under Central Excise Act, 1944 and when the effective rate of duty is 'nil' there is no assessment at all.

++ With the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978 making specific reference to the chargeability and assessment of duty under Central Excise Act, 1944 the necessity to base the tax on the effective rate of duty, whether it be 'nil' or otherwise, is inevitable.

Accordingly, it was concluded that the appeal of Revenue is without merit.

The Member (Judicial) concurred with the finding recorded by the Member (T) and added a small paragraph to the order highlighting the inapplicability of the case laws cited by the AR to the facts of the instant case.

The Revenue appeal was rejected.

(See 2017-TIOL-640-CESTAT-MUM)


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